Friday, December 12, 2008

Trading Screens and Trading Decisions: Finding What Works for You

A reader recently asked me to show a composite picture of my trading screens to illustrate what I watch when I'm trading. This is a very interesting topic, as one's screens should be tailored to two factors:

1) The information that is most important to your trading decisions;
2) Your information processing style

My experience working with traders, especially in prop shops, is that they have many more monitors--and much more information displayed--than they actually use. This is especially true of true scalpers, who generally focus on depth of market and short term charts of their markets. Hedge fund portfolio managers, on the other hand, may be carrying dozens of positions across asset classes and instruments and need to stay on top of a great deal of information, including communications from those in their networks.

One of the smartest things I did as a developing trader is limit the data I looked at. This enabled me to focus on the patterns that I actually trade and tune out everything else. That parsimony continues to the present day. Above is a snapshot of my screen from yesterday's trade. I have one chart active at a time (in the example above it's the NYSE TICK with a short-term moving average in blue; the moving average scale is at left; the raw one-minute values are scaled at right). I simply click on the quote board below and can pick up charts of sector ETFs, oil, US dollar, stock index futures, etc. (click on chart above for detail).

That's it. If I'm trading very short term, I have Market Delta running in the background for reference (volume traded at bid/offer for stock index futures). I also have a second computer (laptop) running off a separate online connection that is for execution only. Orders are written up on the laptop in advance and a single click sends them off. The second computer and connection provide me with redundancy in case something goes wrong with my desktop unit or my cable modem connection.

Most of my research (identifying market themes, relevant trading ranges, daily pivot points) has been done prior to the market open. During market hours I'm simply following ES futures and NYSE TICK on a one-minute basis, toggling occasionally to 5- and 60-minute charts, and keeping my eye on sectors, Treasury rates, and commodities. My short-term trade ideas involve updating odds of hitting particular near-term price levels (trading range extremes, R1 or S1 pivot points, prior day's high or low price). My longer-term ideas involve updating odds of hitting similar price levels from daily/weekly periods. Almost all my trades attempt to follow trends in NYSE TICK and Market Delta that are not fully evident in price movement.

I welcome reader/bloggers to share their screens and decision-making styles and send me the URLs for those posts, so that I can link. It would be interesting to see the diversity of information and decision-making styles out there.


Trading Using NYSE TICK

Identifying Sentiment Trend

Trading and Information Processing